The world as we know it started in 1945, when the United States created an international trade network known as Bretton Woods. In time, that network expanded to include nearly all of the world's economies. Since the dawn of the 21st century, however, the major economies in that system have been pulling apart. Since 2019, the process has accelerated. Now, in a rapidly de-globalizing world, what's going on in Russia and China has the potential to affect your investments at home.
Russia, Sanctions, and War
Russia spent the years 1991-2000 recovering from the Soviet era, but much of the Putin era has been spent expanding Russia's military back into former Soviet countries like Georgia and Kazakhstan. With the February 2022 invasion of Ukraine, an unprecedented sanctions regime all but erased Russian investments from the world. Companies with assets in Russia have largely withdrawn or lost their capital, while Russian commodities are under heavy sanctions and even international banks aren't servicing ATMs in Moscow. Until some resolution is reached, expect Russia to be an absentee in emerging markets and dollar-denominated exchanges.
China's Setting Sun
China got globalized in a big way, averaging 10% economic growth year over year for nearly 25 years. Now, post-COVID-19, trade war and the world's fastest-aging population are removing China from the markets it used to dominate. The aging Chinese population has already moved from high-consumption young adults to high-investment older workers, and now on to mass retirement. Worse, China has cut off exports of fertilizer and foodstuffs, with trade wars promising much more to come. While affordable imports from China may still be an option for a few years, direct investment carries more risk now than ever before.